When you are applying for a mortgage, it is easy to find yourself confused and frustrated with all of the terminology. Let’s start with the basics – are you supposed to go to a mortgage broker, or a direct lender, or are they the same person?
Lenders and brokers do have quite a few similarities, but the truth is that their job descriptions differ in a few substantial ways. While you can go to either for your mortgage needs, there are a few things you should consider before making your decision.
Lenders and Brokers are similar in the regard that both want your business, and both want to find you the financing you need. Each will want to gather information about your current financial situation in order to lend you money for your home. However, depending on which path you choose, your lending experience can differ quite a bit.
Misconception #1 – Brokers have more programs available
One of the biggest misconceptions people have about the difference between a broker and a lender is the availability of a variety of lending sources. The presumption is that when you are working with a mortgage broker, you have access to multiple lending sources. After all, mortgage brokers develop relationships with a large network of lending sources and then represent you in front of all of these lenders in order to find the lender that will offer you the best mortgage option. Due to the lack of liability and accountability the pool of lenders that brokers use is shrinking fast.
When you are working with a direct lender, they are the lending source, but that doesn’t mean you have only one set of programs available. Companies like NOLA Lending have many different lenders that we work with, but the difference is that a lender (like us) underwrites the file and makes the lending decision. This lending authority allows us to make the loan if we believe in it, and then worry about selling the loan to investors later.
In the spirit of full disclosure, there are a few drawbacks to working with a mortgage broker:
- The mortgage broker must work within the guidelines and confines of the lenders that they have access to, meaning that you may still have to go through a lot of red tape to get your mortgage approved.
- Mortgage brokers do not have lending authority and must obtain full and final approval with the final lender before your loan can close.
- While on the other hand, if you work with a direct lender, they may be able to offer you a more flexible and faster experience because they control the lending source directly.
- This factor by itself can sometimes be the difference between getting a loan and being turned down.
So, when deciding between a broker and a lender, you really must decide what is more important to you. A mortgage broker can connect you to multiple lending sources, but a direct lender like NOLA Lending can do the same thing while at the same time providing you with more authority on the approval of your loan. The best plan of action is to find the professional that you trust to give you a positive, stress free, home buying or refinancing experience.
If you would like to learn more about the differences between mortgage brokers and mortgage lenders, please contact us today and find out for yourself!